Future EU Trade Commissioner May be Open to Dropping Controversial Investor Protection Rule

Posted September 29, 2014

Just days after Prime Minister Stephen Harper met with European officials in Ottawa last Friday to celebrate the conclusion of five years of negotiations on the Comprehensive Economic and Trade Agreement (CETA), press reports indicate that the woman likely to replace Karel De Gucht as the EU’s next trade chief is prepared to consider dropping the controversial investor protection rule, at least from future free trade agreements.
At a confirmation hearing in the European Parliament, Sweden’s Commissioner Cecilia Malmström, a pro-free trade liberal, said she couldn’t rule out removing the investor-state dispute settlement (ISDS) clause from the proposed Transatlantic Trade and Investment Partnership (TTIP) with the U.S.

“There are several problems with the investor-state dispute settlement mechanism as it exists today ... I don’t exclude it will be taken out,” Malmström told the EU Parliament.

The issue of how corporations may be able to challenge government policies within the framework of a free trade agreement has become one of the most contentious in EU-US trade talks, with many consumer groups, NGOs, unions and EU politicians fearing that the ISDS mechanism could fatally undermine publicly-funded services such as the national healthcare systems of member states.

The ISDS issue also threatens to complicate ratification of the Canada-EU free trade agreement, with Germany’s economy minister and deputy chancellor Sigmar Gabriel saying last week that Berlin would demand a change in the deal to remove the dispute settlement procedure before approving CETA. “I am certain that the debate is not over by a long shot,” Gabriel told the German Bundestag.

Despite such objections, the designated trade commissioner told the confirmation hearing that she didn’t believe the EU shouldn’t remove the investor protection rules from its planned free trade pact with Canada. “I think it would be a mistake to open up the Canadian agreement, they would open up other chapters and the deal would risk falling, and it is a very important deal for Europe,” Malmström said.